Enlightenment Through Understanding

Some Thoughts on Healthcare

The naysayers have a point when talking about the unfairness (or incompleteness) of the economic recovery. For many people, there really hasn’t been one yet. For the bottom 80 percent of income earners (almost the whole country) or those without financial assets, it can easily feel like the Recovery Fairy has simply skipped their house.

When adjusting for living standards it’s not so bad. $100 today goes a lot further than 20 years ago. A computer was $3000 in 1995 vs. a smart phone that costs $300 and does much more. There are no good answers to the ongoing wealth inequality debate that will please everyone. We, the people who study wealth inequality, need to come to terms with the fact that in the hyper-meritocracy that defines the post-2008 American winner-takes-all economic environment , some will have more than others. Not everyone can participate in the wealth creation boom.

Although real costs have increased, the quality of health care in terms of new treatments has improved, but real prices for things like education, airline travel, cable TV, etc have gone also up, as discussed in earlier posts. However, this could be offset by more generous subsidies so while prices have gone up, people aren’t actually paying more out of pocket.

Adjusted for grants, the inflation-adjusted cost of two-year college has actually declined over the last 20 years.

There’s no question that for-profit colleges are a scam, but there’s no law that prohibits profiting off the endless resource that is human stupidity.

And finally, out of pocket health care expenses are in a steady downtrend:

While real prices are going up, Americans are paying less out of pocket as a percentage of GDP

even as health care costs have been rising, public and private health care insurance has been expanding so that Americans have been paying a lower share of those costs out of pocket.

On the other hand, out of the total income of medicare beneficiaries, out of pocket expenses are rising:

This seems to contradict the earlier findings. A possible explanation is that GDP doesn’t always grow as quickly as income. If GDP doubles, healthcare costs rise slightly and incomes remain flat, out pocket pocket healthcare spending may be a smaller percentage of GDP but a greater percentage of individual income.

Another interesting finding is that % of the population accounts for 20% of healthcare spending and 5% accounts for half:

This is where the argument for Eugenics comes into play as a possible solution to reduce healthcare spending.